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This Aug. 10 photo shows Marcio Christiansen, CEO of Ferretti Group Brazil, at the company's show room in Sao Paulo.

If the rising wealthy class in any indication, business is doing good in Brasil. By BRADLEY BROOKS

SAO PAULO — Marcio Christiansen reeled off tales of the growing ranks of rich Brazilians who visit his luxury Ferretti yacht showroom, where clients sip espressos on an oversized sable sofa and electronic music bubbles in the air.

One man paid $2 million for a ship, Christiansen said, after succumbing within 30 minutes to his kids' pleas of "Buy it, daddy, buy it!" Another toured the sparkling 53-foot yacht on the showroom floor, then asked to discuss it over lunch.

"The waiter comes over to take our order and the client asks to borrow a piece of paper from his pad," said Christiansen, CEO of Ferretti's Brazil group. "He starts working out a contract on it and we've agreed to it before I've asked for a sandwich."

Brazil has always had its select group of superrich with extravagant tastes. But booming commodity prices fueled by Chinese demand, along with some of the world's biggest offshore oil discoveries, have created an expanding, new class of wealthy Brazilians. They, in turn, are boosting the international yacht market even as it plummets in the U.S. and Europe.

The number of millionaire households in South America's biggest nation is forecast to more than triple by 2020. Their spending, along with that of a newly swollen middle class, has protected Brazil more than any other nation in the region from economic shocks since 2008.

Exporting goods like sugar, gold, coffee and rubber, Brazil has been a boom-and-bust place since the 16th century. Past golden ages created a thin strata of the wealthy and extreme inequality. Since the mid-1990s, however, economic reforms following a return to democracy have slowly spread the wealth, and aggressive government social programs since 2003 have lifted 20 million out of poverty.

A May report on the geography of wealth from the U.S.-based consulting firm Deloitte forecasts that U.S. and European nations will remain the global centers for wealthy households during the next decade. Nonetheless, emerging market economies "are likely to prove to be more dynamic in terms of growth rates, creating significant opportunities for wealth managers seeking to gain a share of these potentially lucrative markets."

The boom in Brazil's yacht market attests to that growth.

People walk through the Oscar Freire street shopping district in Sao Paulo.

Andre Penner / AP

Annual boat sales in Brazil have grown up to 30 percent annually since 2008 depending on the specific segment of the market, industry leaders said. Meanwhile, in the more traditional boating markets in the U.S. and Europe, sales of high-end boats have dropped by 70 percent, analysts said.

For the Italian boat maker Ferretti, one of the world's leading yacht manufacturers, sales in Brazil represented less than 5 percent of global revenue in 2007, according to Christiansen.

This year, sales from Ferretti's Brazil group are expected to reach nearly $290 million, or about 40 percent of the company's global revenue, said Christiansen, who has more than three decades of experience selling upper-end boats in Brazil.

Christiansen opened a massive $31 million Ferretti shipyard on the outskirts of Sao Paulo two months ago to meet the new demand. It's expected to produce 120 yachts per year once it reaches capacity.

In the last two years, more than a dozen high-end foreign boat makers have either built a shipyard in Brazil or are partnering with local dealers to export their wares to the market, despite tariffs that range between 70 to 100 percent on imported vessels.

"I never imagined I would get to this level, nor that the established markets would fall so much," Christiansen said. "English, French and American boat builders are targeting this market. I've been in this business for more than three decades and now I'm seeing an invasion from foreigners. They've discovered Brazil."
Just as the newly rich Brazilians are discovering luxury.

According to a report released late last year by the Association of Executive Search Consultants, executives in Sao Paulo now earn more than their counterparts in New York, London, Hong Kong or Singapore, and their disposable income is flooding Brazil's consumer market.

In response, luxury goods sales in Brazil last year hit $8.9 billion, an increase of 28 percent over 2009, according to a study by GfK Custom Research Brasil and the luxury goods consulting firm MCF Consultoria. Brands such as Chanel, Hermes, Jimmy Choo, Lamborghini and others have opened shops in Brazil in the past two years.

When not spending at exclusive shopping centers, Brazilian executives can be seen cruising the seas near Santos south of Sao Paulo, Brazil's financial hub, and along the lush green coast north to Rio de Janeiro. Christiansen and others say marinas that dot Brazil's 7,400-kilometer (4,600-mile) coast are at capacity and that there are few berths to accommodate ships. As soon as a vacancy opens, it is snatched up by a new boat owner.

"We were always told that Brazil was the 'country of the future' but we didn't know when that would arrive," said Ernani Paciornik, a Brazilian marine industry pioneer who organizes international boat shows in Sao Paulo, Rio de Janeiro and southern Brazil. "I think the future has arrived."

The ranks of the new rich, and luxury goods sales, are growing in other developing countries as well, especially the so-called BRIC group of Brazil, Russia, India and China.

The number of millionaire households in the nation of 190 million will have increased 230 percent to more than 1 million by 2020, according to the Deloitte report. China's figure will rise 91 percent to 2.5 million, Russia's by 221 percent to 1.2 million, and India's by 143 percent to 694,600.

"There's been a particular focus on the emerging markets. BRIC, BRIC, BRIC, BRIC seems to be what everyone is now saying," said Ellie Brade, the New Zealand-based editor of Superyacht Intelligence magazine, which focuses on boats at least 100 feet in length.

Giovanni Luigi, CEO of Brazil's largest boat vendor, YachtBrasil, backs his rosy market forecast by pointing out that the country is also awash in lakes and rivers, yet the freshwater boating market is virtually untapped. He says his company projects sales growth of 28 percent this year after racking up $840 million in sales over the last four years.

However, Eduardo Colunna, president of the Brazilian Boat Builder Association, which represents domestic makers, isn't quite as gung-ho. Foreign companies may be overestimating the market, Colunna said, and the lack of marinas to service yachts will hinder sales.

Yet even Colunna's more conservative estimates put market growth at 10 percent a year, attractive enough for foreign companies who have seen the U.S. and European markets dwindle.

Christiansen, for one, believes the boom isn't cooling anytime soon despite recent projections of a slowing economy. The talk in his showroom on a recent afternoon centered on the doubling of annual sales over recent years and more growth to come.

"I used to only sell ships to the extremely rich owners of businesses, never a professional CEO or CFO, just the owners," Christiansen said. "That's changed now, there is more meritocracy in Brazil. More people are earning bonuses based upon the success of their work, and they want to spend it."